Steel demand in India is expected to grow by 7.5 per cent to 128.85 million tonnes (mt) in FY24, as against 119.86 mt FY23. In FY25, demand is expected to grow 6.3 per cent to 136.97 mt, according to estimates put out by the Indian Steel Association (ISA), an industry body that includes the largest steel mills such as Tata Steel, JSW, SAIL, JSPL and AMNS India. 

Driven by strong infrastructure spending and sustained growth in urban consumption, steel demand is expected to expand by 8-9 mt each year for the next two financial years. 

Calling India a “bright spot” that has defied global trends, the ISA said the steel sector has benefited from strong economic growth. 

Also read: ‘Domestic steel demand buoyant, to absorb extra supply even if exports fall’

The rising share of investment in GDP, backed by strong capital expenditure outlay by the government and improving private investment will drive sectors such as construction, railways and capita goods, it said in a statement. 

The government increased its budgeted capex in FY24 by 33 per cent to Rs 10 lakh crore, of which 50 per cent has been allocated for road  and railway  infra, benefitting the steel sector’s growth. 

“Project completion in the real estate sector is also expected to be robust, whilst the government’s push towards affordable housing has seen a 66 per cent increase in outlay. The investment in infrastructure, renewables, mining as well as within the steel sector itself, is expected to benefit the capital goods sector,” the statement mentioned. 

On the other hand, consumption-driven sectors, including automotive and consumer durables, will also see “healthy growth”. 

“Private consumption will largely be sustained by urban consumption, while rural consumption is expected to witness a steady recovery,” ISA said. 

The intermediate goods sector, which is also dependent on both the automobile sector’s growth and exports is seen as a “mixed bag” since sluggish global demand will limit the potential of exports.